MICROFINACE: SOME INTERNATIONAL COMPARISONS

One of the greatest challenges before the Indian sub-continent which accommodates more than one-third of the population is poverty. India, one of the BRIC nations with more than 1.2 billion population is seen by many developed countries as an emerging economy. India " s economic growth has failed to make a significant improvement in its poverty figures with 400 million-more than the total in the poorest African Nations-still stuck in poverty. Government of India with its concern started various poverty alleviation programs but they have failed to deliver the objectives to the level which is desired. The reasons may be many such as failure to reach the target group, loopholes in the system, developing a robust mechanism to name a few. Many countries including India experimented with subsidized credit which only led to increase in the NPAs. The microfinance has come forward to fill up the gap. But the outreach is too small as compared to the requirement and potential. However there is some progress in this regard after active role played by NABARD and formation of SHGs groups. A number of NGOs and MFIs have also delved into the business. Some of them have also started in a big way and have started making profit by issuing IPOs (Initial public offers). But certain development in recent years has brought a fresh focus on the problem of regulation in field of microfinance. The paper delineates three distinct aspects of microfinance, first growth of microfinance in India and some other countries; secondly it discusses the role played by NABARD and other National Banks in growth of SHGs and Grameen Bank. Third, it deals with the role of government in framing legislation for protection of right of micro borrowers. The study also deals with the need for a regulatory body to regulate, develop and guide the numerous MFIs and NGOs who work in the field of microcredit. The paper discusses the factors and theoretical position associated with evolution of microfinance and its role in global scenario.

2011

The rural distress in Andhra Pradesh has been more than evident in reported incidents of farmers' suicides and hunger deaths. The incidence of indebtedness, particularly among small and marginal farming households in the state, is the highest in India. By passively encouraging microfinance institutions to expand without limits in a policy and institutional vacuum, the state had created the conditions for a crisis.

Cons of Microfinance: A Case Study of Andhra Pradesh, 2018

The microcredit sector in Andhra Pradesh recently saw a series of challenges and mishaps as a result of extensive and uncontrolled lending. The overall effect was over-indebtedness and, consequently mass loan repayment defaults. Lending institutions resorted to unethical financial activities for recovering loans, such as confiscation of property and social shaming of the defaulting borrowers. These actions by the microfinance institutions led to widespread suicide cases among microfinance borrowers. This paper critically explores the disadvantages associated with the microfinance sector, especially among the poor in the society who hold to the perception that loans can provide their exit to poverty. The piece of writing will primarily focus on the case study of the microcredit borrowers in Andhra Pradesh, India. A brief overview of the microfinance concept will be provided in the first section. The second part will incorporate the description of the case study context in regards to the disadvantages of microfinance. The major cons that will be comprehensively examined in the paper, include the rising death cases among borrowers due to financial stress, deepening poverty, high-interest rates, in-dignifying the borrowers, and overall decline in the community cohesiveness. These cons contributed to the crisis of Andhra Pradesh which rose to become a reference point as a catastrophic financial intervention of the century. The paper concludes by suggesting a community-based approach to lending that ties the level of credit to sustainability and viability of a micro venture. Keywords: microfinance, poverty, Andhra Pradesh, self –help groups, India, women.

In a country like India where 70 percent of its population lives in rural area and 60 percent depend on agriculture (according to the World Bank reports), micro-finance can play a vital role in providing financial services to the poor and low income individuals. Microfinance is the form of a broad range of financial services such as deposits, loans, payment services, money transfers, insurance, savings, micro-credit etc. to the poor and low income individuals. The importance of micro-finance in the developing economies like India can not be undermined, where a large size of population is living under poverty and large number of people does not have an access to formal banking facilities. The taskforce on Supportive Policy and Regulatory Framework for Microfinance constituted by NABARD defined microfinance as " the provision of thrift, saving, credit and financial services and products of very small amount to the poor's in rural, semi urban and urban areas for enabling them to raise their income level and improve their standard of living. " (Sen, 2008) Micro-finance is regarded as a useful tool for socioeconomic up-liftmen in a developing country like India. It is expected to play a significant role in poverty alleviation and development. There are two broad approaches that characterize the microfinance sector in India is Self Help Groups (SHGs)-Bank linkage programme and Microfinance Institution (MFIs). In India microfinance is dominated by Self Help Groups (SHGs)-Bank linkage programme aimed at providing a cost effective mechanism for providing financial services to the unreached poor. The present paper aims at identifying the current status and role of microfinance in the development of India.

— Microfinance is a source of fi nance to the poor segments of society. It i ncludes loans, savi ngs, credit, insurance services, money transfer and other basic financial services to the economically weaker section of society. Deli very mechanism incorporates the systems that can be used to ensure that micro finance products reach remote area and poor. It is consi dered as an effecti ve tool for eli minating poverty in Indi a. It provi des credit and other financial services of small amount to the economically disadvantaged segment of society in urban as well as rural areas. Micro finance institutions include N.G.Os, Credit Uni ons, N.B.F.Cs. Cooperati ves and banks. In India, the future of microfinance is largely depending upon the self-help groups (S.H.G.)

Increasing access of financial services to deprived section of society is the main motto of Microfinance. In this regard development of microenterprises plays a crucial role for sustainable economic development. The two words microfinance and micro credit can be used interchangeably which means provision of financial services to those living in poverty and excluded from the financial system. These people do not have income nor own a property and therefore, are unable to provide Bank guarantees, as a result of which they are generally forgotten by financial Institutions and Banks. Microfinance has gained a lot of importance and momentum in the last decade. Today microfinance become one of the most debated and documented but still much confused buzzwords in banking and policy making fields. In present study an attempt has been made to reveal the facts pertains to structure of MFIs in India and Bangladesh. Subsequent discussion has been divided in to four sections. Section I comprises ...

Micro-credit intervention programme has been well-recognized world over as an effective tool for poverty alleviation and for improving socio-economic conditions of rural poor. In India too, micro-credit is making a strong headway in its efforts to reduce poverty and empower the rural poor. The rural poor, with the intermediation of voluntary organizations join together for self help to secure better economic growth. This has resulted in the formation of a large number of self help groups in the country, which mobilize savings and recycle the resources generated among the members. Despite various poverty alleviation programmes initiated by Government as well as voluntary organizations, not much difference has been seen in the magnitude of poverty. Notwithstanding an impressive coverage, the formal banking sector has had a limited impact on lending to the poor. Over its entire lifetime, the formal rural banking system in India has struggled to balance the dual objectives of outreach and financial performance. Consequently, there was a need to put in place a new vehicle of financial intermediaries, which could be cost-effective for the banks and user-friendly for the poor. This way, the poor could related to banks in a better manner, and the banks, in turn, could consider banking with them as a better business proposition. The challenge, therefore, was to link a large number of economically underprivileged ones to the formal banking sector, in a sustainable and cost-effective manner. As on 31 March 2010, the Commercial Banks lead with savings accounts of 40,52,915 SHGs (58.3%) followed by RRBs having savings bank accounts of 18,20,870 SHGs (26.2%) and Cooperative Banks having savings bank accounts of 1,079,465 SHGs (15.5%). In spite of the volumes, it has been ascertained that these mandatory and dedicated, subsidized financial programmes, implemented through banking institutions, have not been effective in achieving their social and economic objectives. Several defective features in the planning and implementation of these government sponsored programmes, followed in different countries, have been responsible in greater or lesser degrees for the state of affairs. After nearly three decades of implementation, the substantial efforts and large volumes of credit extended by the banks have not been able to result in the expected benefits to the poor, mainly due to certain inherent contradictions in programme implementation. An efficient and viable credit delivery system catering to a large section of the poor is still a distant dream. Microfinance has succeeded in making a dent in poverty in a number of developing countries. The few innovations in India, though sporadic, have also proved that microfinance can be a potent tool to tackle poverty. There is an urgent need to upscale these innovations. Notwithstanding the progress made over the decades, majority of the rural population still does not appear to have access to finance from a formal source, according to the Rural Financial Access Survey (RFAS) 2003. Some 59 per cent of rural households do not have a deposit account and 79 per cent of rural households have no access to credit from a formal source. The problem of access is even more severe for poorer households in rural areas. Indeed, bank branches in rural areas appear to serve primarily the needs of richer borrowers. Some 66 per cent of large farmers have a deposit account; 44 per cent have access to credit, meanwhile, 70 per cent of marginal farmers do not have a bank account and 87 per cent have no access to credit from a formal source. Presently, the microfinance scenario needs to be reviewed for emerging trends, concerns and growth prospect. The question that how best this Micro finance programme has been really benefiting the beneficiaries still remains to be examined. The present study under reference is one such an attempt to asses the performance of the SHG network of the microfinancing programme in terms of its generation of income and employment of the beneficiaries in the sample district in Andhra Pradesh state.

Stochastic Modeling & Applications, 2022

According to World bank report(2021) India's extreme poor population increased after 2020 pandemic from 60 million to 134 million in just a within a year and it's impact is mostly felt in rural parts of the country. In a developing country like India where majority of the population still live in rural areas andformal credit facilities are limited in most of the rural parts microfinance provides financial services to the poor. Microfinance is regarded as an useful tool for economic development by uplifting the poor section of the society and it is working in this direction. This paper particularly analyses overall impact of microfinance in the economic development of the country under some parameters.This paper compares the client out reach before and after the pandemic years i.e. from 2018-19 to 2020-21. Apart from that rural-urban client base, composition of Microfinance beneficiaries along with different indicators showing growth of Microfinance sectorwere included in this study. The data shows that most of the microfinance loans were used for income generating activities and despite pandemic Non Performing Assets (NPAs) declinedin 2019-20 and remained almost the same in 2020-21

International Journal of Humanities and Social Science Invention, 2021

Indian microfinance is huge industry to empower low income group and unorganised sector. Now a day microfinance is an alternative of viable business along with social development. At the same time the sector faces huge criticism and challenges from every stakeholders after the Andhra Pradesh crisis in 2010. After 2010, microfinance today is a highly regulated industry with the purpose, segment of clients, size of loans, and even price being regulated. As now it is regulated by the RBI, the political risks are also reduced. There are more than one way to provide a finance to poor people. Self Help Group (SHG) is a main component of microfinance. SHG mainly is a group culture to provide women a financial support or draw them into work force. SHG is a channel through which facility of microfinance reach to every door of marginalised sector. In this project, we want to established how microfinance helps poor peoples and how through SHG microfinance reach to every marginalised people. Our objective is to analyse impact of microfinance as a tool of Economic Development in India.In this project,we basically want to analyse performance of three types of microfinance institutions.These are-i)MFI(Microfinance Institutions) ii)SHG (Self Help Groups)and iii)JLG.(Joint Liability Groups).Datas are collected from RBI and NABARD. Our special focus is on SHG as SHG plays an important role in case of microfinance.In case of SHG,we are focusing on yearwise performance of SHG and SHG under NRLM (National Rural Livelihood Mission).Lastly,we calculate Average number of SHG Per state.In each cases,our time period is from 2010-11 to 2017-18,The details performance of these three types of institutions analysed graphically.We also run a correlation coefficient between performance of SHG and SHG under NRLM to judge whether NRLM is a successful mission or not.

International Journal of Creative Research and Thoughts, 2018

Poverty is a major concern in India, being one of the rapid-growing economies in the world, with a growth rate of 7.6 percent in 2015, and a considerable consumer economy. According to World Bank there are about 179.6 million people who live below the poverty line in India. So it is one of the greatest challenges in India to deal with one of the BRIC nations with such a huge population are seen by many countries as an emerging economy. India has failed to make a significant improvement in its poverty alleviation. Government of India with its concern started various poverty alleviation programs but they have failed to deliver the objectives to the level which is desired. The poverty alleviation programs in India can be differentiated on different basis for rural or urban areas. Most of them are designed to cover rural as it is high in such areas. The programs can be mainly grouped into, wage employment, self employment, food security, social security, and urban poverty alleviation. All these programs were programmed with the one theme to minimize and eradicate the poverty and thus uplift the socioeconomic status at individual level. The subsidized credit used by many countries including India was also a failure because of rising Nonperforming assets (NPA). The microfinance came forward and became the most popular tool to fight against the poverty when the Muhammad yunus a noble laureate from Bangladesh came up with the modern microfinance model called Grameen model. On the basis of that India progressed forward and was successful to make self help groups (SHGs) with the help of NABARD. A number of NGOs and MFIs have also delved into the business. From the past years government and various organizations like NABARD and national banks are thrusting to promote the microfinance at various levels but there is a long way to go because the outreach is too small as compared to the requirement and potential. The paper defines three distinct facets of microfinance, first is microfinance and its history, secondly Growth of microfinance in India from last decade, third is role played by the government of India with NABARD and other National banks in growth of SHGs and Grameen bank. The paper also discusses the evolution of microfinance and its role in global scenario.